The Intelligent Cryptocurrency Investor Full Details Review
If you want to be a wise investor in cryptocurrency markets, then you are about to get your chance. Speculators have gone home, optimists have packed their bags and are running pessimistic shows.
While we may lack the necessary financial data to obtain real intrinsic value estimates, we now have the opportunity to seek real companies, build the future, expand their size, and generate revenue and profit.
If we know that the current sentiment is negative and we are sitting in the depression phase of the market cycle, then we can compare this list of high-quality companies with the current pricing, phase in the cycle, and their previous market value. To arrive at.
Recently I have been reading “The IntelligentInvestor” by Benjamin Graham. I have read a lot of trading and investment books, so it was interesting that I had not already read this iconic piece. This book contains a treasure of old knowledge that is still true today. In fact, I’ve recently found that reading old books, or “classics”, often gives you a better summary of the main theories around a topic than new editions.
Let me set the scene with a quote from the book.
The whole point of investment is not purely to earn more money than average but to earn enough money to meet your needs. The best way to measure your investment success is not that you are beating the market right now, but whether you have put in a financial plan and a behavioural discipline that is likely to take you to where you want to go. Huh. What matters, in the end, is not to cross the finish line before anyone else but make sure that you cross it.
It is easy for us to focus on how our mind can be completely overwhelmed with the constant headlines of price data and news. Cryptocurrency investing is unique. This involves a much larger amount of speculation than stock market investment because there is a distinct lack of hard, factual, and financial data.
This means that you need new frameworks for valuation and trading, which is why for Cryptocurrency I have leaned towards focusing on long term trends and technical analysis of market psychology. I believe this is the approach I’ve been using for a long time because I can’t see new data flooding the scene at any time.
The intrinsic value of a cryptocurrency
Although we cannot accurately estimate the intrinsic value of a cryptocurrency without knowledge of assets, revenues, and profits, we can evaluate the opinions and trust of market participants. The first step in value is to run the numbers and decide what the total value of the business is, given its ability to earn current net assets, its past performance, and conservative future revenue. Yet in cryptocurrency, we do not have this data. What we have to do to make our decisions from the market values and market psychology of that time. By doing this we will get an estimate of the “true market value” (different from the intrinsic value).
For example, if a cryptocurrency is falling in an area that has previously been held on several occasions, you can assume that this level was the fair market value for that cryptocurrency. However, what you have to include in this technical calculation is the emotional state of the market in the past, and in the present time.
Explain that as Price approached this specific level, and then it broke. Did the price break due to the overall negative market sentiment? Or was it due to the more negative market opinion of the personal property in question? If it is caused by an overall shift in market sentiment, then there is a chance that this asset falls below its actual market value due to the manipulation of overall sentiment. However, if the price dropped at a time of overall positive market sentiment, it is more likely that there is something distinct and different about the property in question.
Determine the top of an asset bubble
Now, all this information is useful for determining the actual market value of potential bottles, and cryptocurrencies, however, it is most useful when judging and profiting from asset overvaluation.
As we previously talked about individual cryptocurrency is highly speculative in nature. Combine this with the fact that the majority of investors are non-institutional or “average” people who we can begin to make a clearer picture of. The result is a market environment similar to the early years of the stock market. A plethora of new evaluation methods are being created, and the market is still dominated by sentiment.
To use Howard Marx’s terminology, we see the pendulum of investor psychology swinging back and forth at an incredibly fast pace. What usually happens in weeks, months, or years, occurs in hours and days. This is due to a lack of sophistication, liquidity, and players in the market. The main lesson I learned in cryptocurrency is that what is going on will almost always come back.
We can use our framework of fair market value to inspect assets that have been pushed above this level and are likely headed for a retracement. We can also use this framework to inform potential purchase opportunities as prices approach near fair market valuations.
Psychology of a wise investor
In the spring of 1720, Sir Isaac Newton owned shares of the South Sea Company, the hottest stock in England. Noting that the market was getting out of hand, the great physicist said that he could “calculate the speeds of heavenly bodies, but not the madness of people.” Newton dipped its South Sea shares, pocketing a total of 100% profit of £ 7,000. But just a few months later, swept away in the wild excitement of the market, Newton jumped back at a much higher price — and lost £ 20,000 (or more than $ 3 million in today’s money). For the rest of his life, he prohibited anyone from uttering the words “South Sea” in his presence.
Why is this relevant?
The problem stated above is that no one can predict such bubbles or price increases. In the case of cryptocurrencies, prices often take time to return to their fair market value, but they usually do. A handful of assets are limited to frequent expansion and popping as no one believes, or can properly assess the “intrinsic value” of these cryptocurrencies. There is always a price so high that no one wants to pay it. The news then shifts to negative, emotional shifts, and the crowd move from that “hot” property to the next “hot property”.
“The market is a pendulum that swings forever between volatile optimism (which makes stocks too expensive) and unfair pessimism (which makes them too cheap). Intelligent Investor is a realist who sells to optimists and buys from pessimists Is. “- Benjamin Graham
In cryptocurrency, our main role is to assess the cycle of emotion, and how it relates to the price of that cycle, and I believe that the above quote serves that purpose. In cryptocurrency, optimists are usually proven wrong, and when the last pessimist collapses, those optimists will control again.
If you want to be a wise investor in cryptocurrency markets, then you are about to get your chance. Speculators have gone home, optimists have packed their bags and are running pessimistic shows. While we may lack the necessary financial data to obtain real intrinsic value estimates, we now have the opportunity to seek real companies, build the future, expand their size, and generate revenue and profit. If we know that the current sentiment is negative and we are sitting in the depression phase of the market cycle, then we can compare this list of high-quality companies with the current pricing, phase in the cycle, and their previous market value. To arrive at.
“It’s not about beating others in your game. It is about controlling ourselves in our game. “
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